An IVA is a debt solution available in the United Kingdom, designed to act as an alternative to bankruptcy. An IVA normally has a fixed term of just 5 years, during which the IVA applicant must repay as much as they can afford to their creditors. Any debt left unpaid at the end of the term is then legally written off.
However, there can be occasions when, due to the personal circumstances of the applicant, a 5 year agreement is not viable, and this is where a full and final settlement IVA can become an option.
Also referred to as a ‘Lump Sum’ IVA, a full and final settlement IVA gives the applicant an opportunity to make a single cash offer to their creditors as full settlement of their debt.
A full and final settlement IVA is often a preferred option in the eyes of the creditors, for it provides a quick resolution to an individual’s financial problems, whilst providing the creditors a better financial return than could otherwise have been expected through bankruptcy proceedings.
Money for the full and final settlement IVA can be generated through a number of avenues, such as the sale of an asset, but it is most common for the funds to be provided by a third party, such as a family member or friend.
The size of the offer can vary and should be relative to the size of the original debt, but there is no minimum level to the offer. Generally speaking, so long as the offer generates a better financial return when compared to the bankruptcy outcome of the same individual it has a chance of being accepted by the creditors.
Full and final settlement or Lump Sum IVAs provide a perfect debt solution for those people who are facing bankruptcy, yet have a benefactor prepared to offer them assistance.
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